crk-20220630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 001-03262

COMSTOCK RESOURCES, INC.

(Exact name of registrant as specified in its charter)


Nevada			94-1667468
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)

5300 Town and Country Blvd., Suite 500, Frisco, Texas 75034

(Address of principal executive offices)

Telephone No.: (972) 668-8800

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.50 (per share)	CRK	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes x No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐

Emerging growth company ☐

Accelerated filer x

Non-accelerated ☐

Smaller reporting company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No x

The number of shares outstanding of the registrant's common stock, par value $0.50, as of August 3, 2022 was 233,165,068.

COMSTOCK RESOURCES, INC.

QUARTERLY REPORT

For the Quarter Ended June 30, 2022

INDEX


			Page
PART I. Financial Information

Item 1. Financial Statements (Unaudited):
Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021			4
Consolidated Statements of Operations – for the three months and six months ended June 30, 2022 and 2021			5
Consolidated Statements of Stockholders' Equity – for the three months and six months ended June 30, 2022 and 2021			6
Consolidated Statements of Cash Flows – for the six months ended June 30, 2022 and 2021			7
Notes to Consolidated Financial Statements			8

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			19

Item 3. Quantitative and Qualitative Disclosure About Market Risk			23

Item 4. Controls and Procedures			24

PART II. Other Information

Item 6. Exhibits			24

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

COMSTOCK RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	As of
	June 30, 2022		December 31, 2021
	(Unaudited)
	(In thousands)
ASSETS
Cash and cash equivalents	$	32,272	$	30,663
Accounts receivable:
Oil and gas sales	436,379		217,149
Joint interest operations	27,127		29,755
From affiliates	8,150		20,834
Derivative financial instruments	2,086		5,258

Other current assets	24,797		15,077
Total current assets	530,811		318,736
Property and equipment:
Oil and natural gas properties, successful efforts method:
Proved	5,263,298		4,756,394
Unproved	308,468		302,129
Other	24,559		6,690
Accumulated depreciation, depletion and amortization	(1,283,124)		(1,058,067)
Net property and equipment	4,313,201		4,007,146
Goodwill	335,897		335,897


Operating lease right-of-use assets	108,284		6,450

	$	5,288,193	$	4,668,229

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	$	454,752	$	314,569
Accrued costs	153,763		135,026
Operating leases	37,561		2,444
Derivative financial instruments	318,585		181,945
Total current liabilities	964,661		633,984
Long-term debt	2,510,253		2,615,235
Deferred income taxes	267,746		197,417
Derivative financial instruments	—		4,042
Long-term operating leases	70,797		4,075
Reserve for future abandonment costs	28,433		25,673
Other non-current liabilities	24		24
Total liabilities	3,841,914		3,480,450
Commitments and contingencies
Mezzanine equity:
Series B Convertible Preferred stock — 5,000,000 shares authorized, 175,000 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively	175,000		175,000
Stockholders' equity:
Common stock—$0.50 par, 400,000,000 shares authorized, 233,158,892 and 232,924,646 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively	116,579		116,462
Additional paid-in capital	1,101,953		1,100,359
Accumulated earnings (deficit)	52,747		(204,042)
Total stockholders' equity	1,271,279		1,012,779
	$	5,288,193	$	4,668,229

The accompanying notes are an integral part of these statements.

COMSTOCK RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(In thousands, except per share amounts)
Revenues:
Natural gas sales	$	858,838	$	321,520	$	1,381,795	$	645,480
Oil sales	2,504		22,173		4,388		38,698
Total oil and gas sales	861,342		343,693		1,386,183		684,178
Gas services	84,912		—		129,485		—
Total revenues	946,254		343,693		1,515,668		684,178
Operating expenses:
Production and ad valorem taxes	21,729		10,141		35,549		19,793
Gathering and transportation	36,964		31,736		69,057		61,194
Lease operating	25,079		26,011		51,265		50,574
Exploration	2,342		—		3,363		—
Depreciation, depletion and amortization	119,201		121,446		225,929		230,574
Gas services	82,778		—		123,453		—
General and administrative	9,063		7,872		17,286		15,900
Gain on sale of assets	(19)		(9)		(21)		(79)
Total operating expenses	297,137		197,197		525,881		377,956

Operating income	649,117		146,496		989,787		306,222
Other income (expenses):
Loss from derivative financial instruments	(72,826)		(223,958)		(510,319)		(245,707)
Other income	182		530		450		811

Interest expense	(44,320)		(56,880)		(90,811)		(120,691)
Loss on early retirement of debt	(46,840)		(114,060)		(46,840)		(352,599)
Total other expenses	(163,804)		(394,368)		(647,520)		(718,186)
Income (loss) before income taxes	485,313		(247,872)		342,267		(411,964)
(Provision for) benefit from income taxes	(108,422)		68,177		(76,800)		98,144
Net income (loss)	376,891		(179,695)		265,467		(313,820)
Preferred stock dividends	(4,363)		(4,363)		(8,678)		(8,678)
Net income (loss) available to common stockholders	$	372,528	$	(184,058)	$	256,789	$	(322,498)

Net income (loss) per share:
Basic	$	1.60	$	(0.80)	$	1.10	$	(1.39)
Diluted	$	1.36	$	(0.80)	$	0.96	$	(1.39)
Weighted average shares outstanding:
Basic	232,045		231,428		232,011		231,403
Diluted	277,614		231,428		277,485		231,403

The accompanying notes are an integral part of these statements.

COMSTOCK RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)


	Common Shares	Common Stock- Par Value		Additional Paid-in Capital		Accumulated Earnings (Deficit)		Total
	(In thousands)

Balance at January 1, 2021	232,415	$	116,206	$	1,095,384	$	55,183	$	1,266,773
Stock-based compensation	(4)	—		1,690		—		1,690

Stock issuance costs	—	—		(30)		—		(30)
Net loss	—	—		—		(134,125)		(134,125)
Payment of preferred dividends	—	—		—		(4,315)		(4,315)
Balance at March 31, 2021	232,411	$	116,206	$	1,097,044	$	(83,257)	$	1,129,993
Stock-based compensation	472	235		1,564		—		1,799
Income tax withholdings on equity awards	(

SEC Form 10-Q filed by Comstock Resources Inc.